With growing concern over the Coronavirus, yields dropped again today and portions of the yield curve are inverted out to seven years.
For example, the yield on the 7-year not is lower than the yield on the 1-year not and everything shorter in duration.
Yellow highlights show the yield on the 3-year, 2-year- and 1-year notes is each lower than the next shorter duration.
And the yield on the 30-year long bond is again flirting with the 2% level.
For discussion of the coronavirus threat, please see Hundreds of Virus Carrying Planes Headed for US, London, Paris, Vancouver.
Also see Chris Martenson’s proclamation regarding the World Health Organization: “WHO is Derelict” on Coronavirus
Mike “Mish” Shedlock
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Mish has mentioned many times that duration mismatch (Borrowing short term at low rates and lending long term at high rates.) is a fraud allowed to exist in the financial system. Yield inversion certainly would punish lenders who not only simply participate in duration mismatch, but also make it a leveraged portion of their business.
Yep… been really watching it crush down for the last week especially. Take a look at the collateral side of the repo market. Is this caused by MBS?